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The topics and opinions expressed in the following show are
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solely those of the hosts and their guests, and not
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those of W FOURCY Radio. It's employees are affiliates. We
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make no recommendations or endorsements for radio show programs, services,
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or products mentioned on air or on our web. No
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liability explicitor implies shall be extended to W FOURCY Radio
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or its employees are affiliates. Any questions or comments should
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be directed to those show hosts. Thank you for choosing
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W FOURCY Radio.
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Welcome to Powerful Business Strategies, where you will find out
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that everything you have ever learned about growing your business
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is wrong. Finally, a show where you'll learn the right
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way to grow your business by learning business and financial
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strategies that your competition isn't doing. And now here's your host,
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President of Next Step CFO Michael Barbarita, and joining Michael
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for today's show as an executive moderator is Chooky Obia.
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We're welcome to Powerful Business Strategies. You know, the reason
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why you don't hear that more energized voice of Chucky
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Obio welcoming you all to the show is because Chucky's
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wife and Chucky recently welcomed their first baby, chelseydese Obio,
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to the world, So congratulations to Chucky and his wife,
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and Chucky will be on leave for a while in
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the meantime. My name is Michael Barber Rita, President of
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NeXTSTEP CFO, and next Step CFO is a fractional CFO
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and strategic implementation firm. Business owners hire us the double
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and triple their profit through implementing business and financial strategies
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that their competition isn't doing. Our vision is to ensure
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overwhelmed business owners achieve the time, freedom and consistent profits
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to build a legacy and the life the desire and
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our mission is dedicated to guiding those small business owners
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to leveraging their time, exploding their profits, and building a
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meaningful legacy. So the show powerful business strategies in our
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book of the same name is a step toward accomplishing
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that vision and mission. Chocky and I are both affiliated
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with a number of different organizations. Chocky currently serves as
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the managing director of business development for Better Price, a
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global business focused law firm, and in addition to that,
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Cheecky and I collaborate to moderate business roundtables around the
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country and around the world and document those insights as
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part of our book Powerful Business Strategies. But please note
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that the views expressed on this show are our personal
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views based on our own successful experiences, and it's something
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that i'd like to share that I've announced previously. If
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you have a business problem that you'd like us to answer,
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or a question, a business question or a strategy that
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you'd like to ask about, please email us at ask
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at NEXTSTEPCFO dot net. Now it doesn't matter what the
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business problem is or what the question is, and we
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will answer it for you. And there are a couple
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things that we ask them. One, please state whether it
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is something we can answer on the air or if
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it's confidential. Of course, if it's confidential, we won't put
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it on the air. And number two, please provide your
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phone number because business problems can be complex and so
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we might need a little bit more context or clarity.
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That email address again is ask at NEXTSTEPCFO dot net.
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And I want to point out that we've had a
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couple of people with questions that we were able to answer,
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but they did request confidentiality, which we will always honor.
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You know, we business owners wake up each morning, most
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of us think about our goals, our struggles, our own journey.
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We make lists of what we need to accomplish, worry
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about our deadlines, and focus on our personal growth. And
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while self improvement and personal growth is very important, I
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want to challenge you today to think bigger, to think
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beyond yourself, because here's the truth that many of us overlook.
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Every skill you're developing, every obstacle you're overcoming, every lesson
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you're learning, it's not just for you. The universe has
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a bigger plan for your talents. Think about it. Why
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were you given your specific abilities? Why do you have
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your unique combination of experiences. Why do you feel drawn
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to certain paths while others don't. The answer is deceptively simple,
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yet very profound. You were built to be the solution
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to someone else's problem. Your struggles are preparing you to
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understand someone else's pain. Your victories are teaching you how
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to guide others to their own success. Right now as
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I speak, someone out there is facing a challenge that
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only your unique perspective can help them overcome. You are
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the prescription for someone's pain. You know. Every morning, entrepreneurs
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across the country wake up facing the same question is
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it all worth it? The late nights, the constant pressure,
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the never ending challenges. Sometimes it feels like pushing a
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boulder uphill. But here's what separates extraordinary business owners from
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the rest. They understand that challenges aren't obstacles. They're opportunities
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disguised as problems. Every successful business owner I've ever worked
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with didn't succeed because they avoided mistakes. They succeeded because
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they learned to convert those mistakes into stepping stones. Today,
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we're continuing our journey into the costly mistakes that could
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be draining one hundred thousand dollars or more from your business.
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Not to make you feel bad about these mistakes, but
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to show you how to turn them into your greatest
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competitive advantages. Because when you fix what your competition doesn't
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even realize is broken, and breakthrough and success really happens.
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So today we're continuing our explanation of one hundred thousand
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dollars mistakes that could be silently draining profits from your business.
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Last week, we covered three major mistakes not speaking your
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customer's language, not doing things in the right or doing
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things in the wrong order, and having no way to
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separate yourself from your competitors. The response was overwhelming, so
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many of you reached out to share how identifying these
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mistakes has already begun to improve your business. So today
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we're going to dive into three more critical mistakes that
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could be causing you one hundred thousand dollars or more
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each year. First, we'll explore how undervaluing yourself and your
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services is creating a profit leak that most business owners
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don't even realize. We'll show you a conintuitive approach to
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pricing that actually attracts better clients while increasing your profit margins. Second,
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we'll tackle one of the most yet well most common,
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yet devastating mistakes, not knowing your numbers. Now, most business
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owners are flying blind when it comes to their financial metrics,
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making decisions based on good feeling rather than concrete data.
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We reveal the vital five numbers every business owner should
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know and every business owner must go and I understand
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how understanding these numbers can dramatically improve your decision making.
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And Third, will uncover how not understanding the bias journey
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is causing you to leave ninety seven percent of your
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potential market untapped. We'll show you how to capture prospects
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at every stage of their buying decision, not just the
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small one to three percent of people who are ready
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to buy the day. And these mistakes on theory, they're
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real issues. They're real issues that we've encountered working with
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hundreds of businesses across dozens of industries. And here's the
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good news. Like we said last week, they're completely fixable.
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These mistakes are completely fixable. What's truly exciting is that
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when you correct these mistakes, you're not just saving money,
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you're creating new opportunities for growth that competition is even
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aware of. And this is this is about turning problems
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into profit centers. So grab that pen and paper, because
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you're about to discover why everything you've ever learned about
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growing your business is wrong, and more importantly, what to
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do about it. Remember, if you're driving, don't grab that
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pen and paper. Listen to the recording at Powerful business
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Strategies dot com. So, as I mentioned, we talked about
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three major mistakes, so let's dive in. We've already talked
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about the three major mistakes last week, so let's dive
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into that fourth major mistake, costing businesses one hundred thousand
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dollars more, and that's undervaluing yourself and your services. This
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is perhaps the most persuasive mistake I see across, pervasive
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mistake that I see across nearly every industry and business size.
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And here's a startling fact. According to our research, over
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eighty percent of businesses are underpricing their products or services
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by at least five to twenty percent. So for a
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business doing a half a million in annual revenue, that's
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twenty five thousand to one hundred thousand dollars right there.
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So let me share a recent example that really drives
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this home. A consultant in the manufacturing space was charging
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one hundred and twenty five dollars an hour for his services.
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This rate was considered to be the industry's standard, and
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it was what everybody else was charging. And when he
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analyzed the value he was delivering to his clients, he
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discovered his that he was regularly saving them between fifteen
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one hundred and fifty thousand operational cost. Yet he was
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pricing his services based on his time, not the value
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that he delivered. And this is where most business owners
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are wrong. They price based on the cost or their
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time rather than the value they create for their customers.
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It's a fundamental misunderstanding of how pricing actually works. So
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let me be crystal clear about this. Customers don't say
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no to you, They say no to themselves. People only
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say yes to themselves when the value they believe they're
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getting exceeds the price that they're paying. The key word
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here is believed, because it's about perceived value, not just
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the actual value. And this is why demonstrating value is
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so critical to your pricing strategy. Most of the business
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owners simply state their prices without properly building the value first.
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When you've failed to build value, twce becomes the only consideration.
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So here's a framework for building value that allows you
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to charge premium prices. First, identify and quantify the specific
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problems that your product or service solves. Second, demonstrate the
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cost of those problems going unsolved. Third, show the unique
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approach you take to solving those problems. Fourth, provide proof
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that your approach works. And five only then should you
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present your price, which should now seem not only reasonable,
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but a bargain in comparison the value that you're delivering.
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And so let me give you a real life example
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of how this works. A marketing agency was charging three
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thousand a month for their services, right in line with
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their competitors. But by implementing this value building framework, they
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were able to increase their prices to five thousand a
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month while actually in increasing their closing rate. Wow, how
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do they do that? Well? They stop talking about deliveris
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like deliverables like social media management and email marketing, and
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instead they focused on business outcomes that they created, like
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we help manufacturing companies generate between fifteen and twenty five
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qualified leads per month with an average client value of
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twelve thousand dollars. Suddenly, five thousand seem like a value
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compared to the sorry, it seemed like a bargain compared
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to the value that they were delivering, and of course
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they were able to prove that in their presentation. And
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this brings me to an important point about pricing psychology.
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There's a concept called price anchoring that dramatically affects how
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people perceive your prices. When you present a price without context,
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people will compare it to whatever reference point they have
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available and usually guess what it's their competitives prices. But
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when you control the reference point by establishing the value,
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you deliver First, you change the entire dynamic, the entire
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context of the price discussion. For example, if you're a
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business coach, let's say and you say my coaching program
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is ten thousand dollars, Well, that might seem expensive in isolation,
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but if you first established that your typical clientcy is
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a fifty thousand dollars increase in profit after working with you, well,
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suddenly ten thousand seems not only like a reasonable investment,
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but like a bargain. We're getting a question from a listener, Michael.
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Many business owners worry that raising their prices will drive
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away customers. Oh yeah, how do you address that concern? Well,
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that is a common fear. But here's what's interesting. When
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you raise your prices strategically, you typically lose the clients
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you don't want to anyway, The price sensitive clients who
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demand the most time, cause the most headaches. Theyre usually
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the first to go, and they're replaced by clients and
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customers who value quality, results and expertise. Clients and customers
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who are actually easy to work with and more appreciative
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of what you do. Remember, your goal is it to
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work with everyone, is to work with the right people
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who value what you deliver. And here's the other thing.
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If you were with NeXTSTEP CFO, we have a spreadsheet
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that will show you how many customers you can afford
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to lose and maintain the same profit you had before
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the price increase. Many business owners overcome their fear of
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driving away customers when they understand how many customers they
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can afford to lose. So here's another critical aspect of
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value based pricing. Different customers perceive value differently. This is
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why a one size fits all pricing is almost always
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a mistake. So instead, consider implementing tiered pricing options that
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allowed customers to self select based on their perception of value.
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Some people call this a good, better best model. A
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software company implemented this strategy by offering three different tiers
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of service. What was a basic package, which was their
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good nineteen ninety seven per year, a Premium package which
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was there better at three thousand, nine ninety seven per year,
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and their best was a VIP package at seven nine
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and ninety seven dollars per year. Before this change, they
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were offering only one option at twenty five hundred dollars.
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After implementing this tiered pricing, their average sale increased of
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forty two hundred dollars, a sixty eight percent increase. Why Well,
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because different customers value different things, and tiered pricing allows
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them to choose based on what they value the most.
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But here's where most businesses make another costly pricing mistake.
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They focus only on the price itself and ignore the
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payment terms. The way you structure your payment terms can
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have a massive impact on both your close rate and
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your cash flow. There was a business consultant who was
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charging twelve thousand dollars for a six month engagement, all